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U.S. gaming regulators and lawmakers believe the move by prominent arcade chain Dave & Buster’s to incorporate peer-to-peer wagering into its loyalty app will violate state gambling laws.
“We've not received any contact from Dave & Buster's, but we've seen a number of news reports about this initiative,” said Seth Elkin, a spokesman with the Maryland Lottery and Gaming Control Agency.
“Based on our limited understanding of what they're planning, it would be considered sports wagering under Maryland law, and they would need to be licensed in order to operate in Maryland,” Elkin told Vixio GamblingCompliance.
Jessica Franks, a spokeswoman with the Ohio Casino Control Commission, said the commission has serious concerns about the proposal, “including that it appears to violate Ohio law regarding the facilitating of illegal prizes for skill-based amusement machines.”
“We are reaching out to Dave & Buster’s for additional information,” Franks said.
The Pennsylvania Gaming Control Board and Massachusetts Gaming Commission are also both looking into the matter.
Dave & Buster’s has partnered with Lucra Sports, a gamification software company, to integrate its software into the Dave & Buster’s loyalty app. The technology will allow Dave & Buster’s loyalty members to compete against other customers for real money on skill-based games, such as skee-ball.
The rollout of the new app is expected to begin within the next couple of months.
The chain has about 164 locations in North America, including in Massachusetts, Ohio, Pennsylvania, and Maryland.
It is unknown if Dave & Buster’s will seek approval or licensure from state gaming regulators before launching its app in states with regulated land-based casinos, sports betting or internet gaming.
Marc Edelman, professor of law at the Zicklin School of Business at Baruch College in New York, said whether the offering would be considered gambling or a legitimate skill-based game varies by state law.
“Overall, in most states a bona fide activity of skill where the participants compete against each other will be outside the general state law of gambling,” Edelman told Vixio. “It is based upon the exception for boxing, tennis and golf that are able to charge entry fees or memberships and pay a prize to the competition winner.”
But Edelman cautioned that if a player was wagering against Dave & Buster’s or on another customer playing an arcade game then it could been seen to be outside the general exemption.
“As always the devil is in the details and they aren't yet crystal clear to me,” said Ronnie Jones, the former chairman of the Louisiana Gaming Control Board.
“However, I'd say that this appears to be gambling to me. It's wagering something of value in exchange for a chance to win something of value based on the outcome of a competition. Now, whether or not that runs afoul of the laws of any particular state would depend on gaming law in that state.”
Jones told Vixio that such a wagering offering would likely be outright illegal and prohibited in some states.
“In other jurisdictions, where some forms of gaming are legal, regulators might assert that Dave & Busters would be subject to state licensure and oversight,” he added. “And like the continuum of gambling's definition, there's probably a larger group of states where this will fall into that gray area subject to legal interpretation.”
Lucra and Dave & Buster’s did not respond to requests for comment.
In response to Dave & Buster’s plan to allow loyalty members to digitally compete in real-money wagering on arcade games, an Illinois lawmaker has quickly introduced legislation to prohibit arcades from advertising and facilitating wagering on amusements games at its locations.
Representative Daniel Didech, a Democrat, introduced House Bill 5832 on Thursday (May 2), where it was referred to the House Rules Committee. As of Friday, Didech’s bill had 27 cosponsors in the Illinois House.
“Gambling establishments are among the most strictly regulated businesses in Illinois,” Didech said in a statement announcing his measure.
“Everyone involved in the gambling industry in Illinois undergoes thorough background checks, is required to implement security protocols, can only offer games that are fair and safe for players, and must create a responsible environment to protect minors and problem gamblers.”
Didech said he believed it was “inappropriate for family-friendly arcades to facilitate unregulated gambling on their premises.”
“These businesses simply do not have the ability to oversee gambling activity in a safe and responsible manner,” he added.
Didech serves as chairman of the Illinois House Gaming Committee.
Didech's bill would prohibit a family amusement establishment from facilitating wagering on amusement games and would also ban amusement businesses from engaging in advertising that promotes wagering on amusement games.
Under the bill, Dave & Buster’s and other family amusement businesses would continue to be allowed to enable a single player to receive a coupon or a point that can be redeemed onsite for merchandise.
Amusement games that allow a single player to manipulate a claw or similar device within an enclosure that allows a winner to redeem merchandise directly from the game would also continue to be legal in Illinois.
